JODC registers 407% increase in revenue in Q3 2022

A notable development during the period was the company’s successful close of the Alinma Fund debt-to-equity transaction, the company said

Saudi-based developer Jabal Omar Development Company (JODC), the master developer of the massive Jabal Omar mixed-use project in Makkah, has announced its financial results for the third quarter of 2022.

Amongst the key highlights were an increase in revenue by 407% to $58.25mn during the quarter, off the back of high occupancy levels across its hotel and commercial portfolio. Gross profit also improved of the three-month period, coming in at $2.13mn versus a gross loss of $17.29mn in the same period a year ago. This was predominately driven by strong revenue recovery as well as effective cost containment measures implemented as part of the comprehensive transformation strategy, the developer said.

A notable development during the period was the company’s successful close of the Alinma Fund debt-to-equity transaction. The company increased its issued share capital to $3.07bn by creating 225,134,162 new ordinary shares, which were issued to the unitholder of the fund in return for settling $1.41bn in outstanding debt owed to the fund.

In July 2020, JODC issued the ownership deed for the Makkah project and, in December 2020, the developer agreed the $221mn sale of a plot of land at its Jabal Omar project in Makkah.

In doing so, the company has also freed up $143.63mn in cash that used to go as rent payments to the fund each year (of which JODC’s ownership previously stood at 16.42%), resulting in a $120mn cash saving, allocating it to more productive and value-enhancing use.

Financial costs for the three-month period were $3.99mn, a 92% decline from the year-ago period, driven by the positive realisation of initiatives within the capital structure optimisation strategy, part of the comprehensive transformation plan.

Net loss was $40.7mn, significantly narrowing from a net loss of $71.82mn in Q3 2021. This improvement was driven by the return in the Hajj and Umrah activity levels to almost pre-Covid levels, and was also attributed to the one-off gain from the completion of the Alinma Makkah Real Estate Fund (the “Alinma Fund”) debt-to-equity transaction.

In October 2021, the firm raised $138mn through the sale of land in Makkah city.

Khaled Al Amoudi, CEO of Jabal Omar Development Company said, “The revenue recovery we saw in the second quarter gathered pace in the third quarter. A return of visitors and pilgrims to Makkah and the removal of pandemic-related restrictions have driven occupancy levels higher at our hotels, and a recovery in business and consumer sentiment underpinned a strong improvement in our commercial portfolio’s performance.”

“On an operating level, we are performing more efficiently than ever and have a leaner cost structure, supporting significant operating margin improvement. This is owed to the successful rollout and implementation of the company-wide transformation strategy and our asset management teams’ proactive efforts. We will be focusing our efforts on completing the outstanding phases of the project and targeting the development and completion of a portion of the 2,613 new hotel rooms and adding more than 5,000sqm of gross leasable area in our commercial assets by Ramadan, which will support the growth of our operating portfolio,” he added.

For the first nine months of the year, revenue increased 330% year on year to $162.27mn on the back of a rebound in Hajj and Umrah activity and a return to life and business as usual in Makkah and across the Kingdom.

In October 2022, JODC said the completion of Phases Two and Three of the Makkah mega master development are on track for year-end.

Gross profit for the nine-month period came in at $21.01mn, a considerable improvement from the gross loss of $53.20mn in the same period a year ago, the developer said. Financial costs for the nine-month period were $79.27mn, down 46% versus nine-month 2021. This decrease is due to the completion of Alinma Fund transaction, which led to a reduction in liabilities owed to the fund’s unitholders.

Net loss during the same period was $42.03mn, a narrowing net loss of $91.77mn produced in nine-month 2021, the firm concluded.

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